From Founder to Franchisor: What You Need to Validate Pilot Markets

Before bringing franchisees on board, the most important thing a founder can do is prove their model works beyond its original location. Piloting in a new market shows whether a brand truly has the infrastructure to scale. Done right, it can mean the difference between fixing issues before they reach franchise owners and dealing with them in real time.

“When I was thinking about franchising, I went to my mentors, and I said, ‘Hey, I think this could be a really great franchise. What should that path look like if I want to consider becoming a franchise in the next two to three years?’” said Marina Mentzel, founder of urSwim. “With the exception of maybe one mentor, they all recommended that I pilot a program outside my current territory. And that's exactly what we decided to do.”

Rather than growing their corporate footprint in New York, Mentzel and her team took a chance in a different market, opening their first out-of-state location in Connecticut. Testing in a new environment is an opportunity to see whether core systems are truly universal and whether they can be applied and managed effectively across different territories. 

“When you start to expand to different territories, you really start to see all of your systemic issues start to rise to the surface very quickly,” Mentzel said. “Problem solving some of that before you become a franchise is critical, so that when your franchisees are coming on, you're not doing that R&D. It’s been done and tested, and hopefully at that point you have resources to support alternative markets, which I think is really critical to a successful franchise.”

What to Test and Validate in a Pilot Market

Pilot markets are an opportunity to test everything from your original location and to see what works somewhere else. Operate business as usual and see what works and what does not.

“First and foremost, we are a service-based brand led by people, and we are consumer-facing, so we pressure-tested our sales tracks and our service,” Mentzel said. “We needed to make sure that what worked in New York worked in Connecticut.”

This includes fundamentals like the service offering, pricing models, back-end systems, software and the operational elements that makes the business distinct. Focus closely on those critical aspects to make sure the model has legs and sustainability before expanding. Franchising is not a one-size-fits-all model, so pressure testing in different environments and responding to feedback allows franchisors to make slight adjustments that can be unique to individual territories. It also allows brands to determine the non-negotiable framework. 

“It's tried and tested and here's why — these are the metrics that reflect that data,” said Mentzel. “Make sure that the infrastructure is there and you have it pressure tested in a way that you're not doing that in real time with franchisees. Your core product offering needs to be tight.”

How Do You Know When to Expand?

Once a pilot market has been established, it’s time to either expand or decide to wait. Franchisors can gauge whether it is the right time to expand by looking for key milestones, including whether the product offering resonated with the local community. Can you get the same results you saw at the flagship location?

“Look for nuances that perhaps a franchisee would encounter that haven't been anticipated and navigate that,” Mentzel said. “Really build something that's sustainable and answer the pain points that a franchisee could have.”

For emerging brands, it can be helpful for a founder to stay closely involved with early franchisees, gather feedback based on what they need and build useful systems for them in real time. Before becoming a franchisor, all core deliverables need to be buttoned up. 

“You're only going to encounter more development as the franchise scales,” Mentzel said. “So, if you don't have a core thesis and your core product offerings and your baseline systems, it will become a real struggle once franchisees also come with additional feedback.”

Want to learn more about how 1851 helps franchisors grow their franchises with confidence? Visit www.1851growthclub.com and see what we can do for you.